Rogers, Shaw look to protect their turf with Shomi streaming service to rival Netflix

Dubbed shomi, the content streaming service will debut during the first week of November and cost $8.99 a month.

Canadians increasingly like to watch their TV over the Internet and two of the country’s biggest communications and broadcast companies are promising to give them what they want.

Rogers Communications Inc. and Shaw Communications Inc. are teaming up to launch a video streaming service to compete with so-called over-the-top players such as Netflix, which have been grabbing market share from conventional players over the last several years.

Rogers and Shaw announced on Tuesday that their new service, called Shomi, will be available to their broadband and cable customers in the first week of November, at a price of $8.99 per month.

The two communications giants are reported to have signed deals worth over $100-million with leading U.S. movie studios and distributors including Warner Bros., NBC Universal and 20th Century Fox.

However, when launch time rolls around more broadcasters could be involved as the partners said they are in discussions with other potential players.

“We keenly understand the media landscape is rapidly changing and that viewers are looking for greater flexibility when it comes to what they watch and how they watch it,” Barbara Williams, Shaw’s senior vice-president of content, said in a statement. “Shomi is our first step into the new world of content streaming and we’re so pleased to be able to bring this made-in-Canada service to the market.”

Shomi will be available initially on tablet, mobile, online, Xbox 360 and set top boxes. It will feature prior seasons of popular TV shows and films including Modern Family, Sons of Anarchy, Sleepy Hollow, Shameless, Chicago Fire, The Strain, and American Horror Story.

Since its arrival in Canada in 2010, Netflix has signed up more than four million customers, a major chunk of the country’s 14-million TV viewers and a big concern for cable companies including Rogers and Shaw.

Part of the impact can be seen in the slowing growth of TV subscribers versus the steady rise of broadband subscribers. Roughly 20% of households did not subscribe to conventional TV services at the end of last year and the number is expected to grow to 21% by the end of this year, according to Brahm Eiley, president of Convergence Consulting Group Ltd.

Speculation that Rogers and Shaw were working on a streaming video service has been around for more than a year and industry observers said it was only a matter of time before traditional cable and broadcast companies came out with a response to Netflix. (Bell Canada is said to be working on its own streaming video service.)

Shomi presents a big opportunity for the Canadian companies to boost subscriber revenues, but at the same time one of the big questions that remains to be answered is how their customers will respond.

“ subscribers opt into paying an extra $8.99 per month for content that otherwise, especially in the case of prior seasons of existing TV series, might have been expected to enrich VOD and related TV Everywhere offerings as part of existing subscriptions,” said Adam Shine, an analyst at National Bank Financial.

One of the challenges of video service providers, whether on demand or over the internet, is building an effective subscriber interface. Rogers and Shaw are promising a state-of-the-art product what will enable customers to easily access movies and shows they want to watch. Even more important is content, and the partners are confident they have something Canadians will value.

“The success of Netflix is its original programming and in order for Shomi to be successful, they’re going to have to ,” said an analyst who asked not to be named

Keith Pelley, president of Rogers Media, said he’s not worried about arriving late on the scene, saying their research has shown consumers “can support two, three, even four SVODs (subscription video-on-demand).”

The companies hope to lure viewers by adding curation by experts — a human touch akin to what was once found in video stores — rather than relying solely on algorithms to suggest movies and shows.

“There’s another SVOD out there. (…) I think the user interface that we have is better, I think the content that we have is very compelling to Canadians and I think the curation that we did with our collections is stronger,” Mr. Pelley told The Canadian Press in an interview.

Mr. Pelley said that fight for content will ensure there’s room for more than one video-on-demand service in the Canadian market.“I think it’s impossible for one service to have all the content,” he said.

Shomi will have 30% Canadian content, and both companies said they are open to working with other distribution partners. “Quite a few titles” will come from the CBC, they said.

The service will remain in beta mode for six months to a year while they fine-tune the platform and update their catalogue, they said.

“We wanted to get it out now, we felt like it was a strong enough product to get out, with great content that will really resonate,” Pelley said.

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